iv
DISCLOSURE SCHEDULE
EXHIBITS
Exhibit A -- Persons Having Knowledge
Exhibit B -- Financing Schedule
Exhibit C -- Shareholders' Agreement
v
RECAPITALIZATION AGREEMENT
--------------------------
This Recapitalization Agreement, dated as of May 21, 2000, is by and
between BraveTwo Acquisition, L.L.C., a Delaware limited liability company
("LLC"), Advanced Micro Devices, Inc., a Delaware corporation ("AMD"), and
--- ---
BoldCo, Inc., a California corporation and wholly-owned subsidiary of AMD (the
"Company").
-------
RECITALS
--------
A. AMD owns all of the issued and outstanding capital stock of the
Company.
B. At the Closing (as defined below), the Company will enter into the
senior secured loan agreement by and between the Company and Morgan Stanley
Senior Funding, Inc. (the "Senior Secured Lender") providing for a senior
---------------------
secured term loan to the Company of $150 million (the "Senior Secured Loan").
-------------------
C. At the Closing, LLC will purchase from AMD 90,000,000 shares of
common stock (the "Common Stock") and 125,000 shares of Preferred Stock for
------------
aggregate consideration of $280 million.
D. At the Closing, the Company shall redeem from AMD 55,162,002
shares of the Common Stock for aggregate consideration of $95 million (the
"Redemption").
----------
E. It is the intent of the parties to this Agreement that the sum of
the Stock Purchase Price and the Redemption Price shall be $375 million.
F. It is intended that the transactions contemplated hereby be
recorded as a recapitalization of the Company for financial reporting purposes.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, AMD, LLC and the Company hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
-------------
following meanings:
"Action" shall have the meaning ascribed to such term in the
------
Reorganization Agreement.
"Administrative Services Agreement" shall mean the Administrative
---------------------------------
Services Agreement between AMD and the Company, to be dated as of the Closing
Date.
"Affiliate" shall have the meaning ascribed to such term in the
---------
Reorganization Agreement.
"Agreement" shall mean this Recapitalization Agreement, together with
---------
the Disclosure Schedule and all exhibits referenced herein.
"Ancillary Agreements" shall mean the Administrative Services
--------------------
Agreement, Wafer Fabrication Agreement, Assembly, Test, Mark and Pack Agreement,
Intellectual Property Cross-License Agreement, Patent Assignment Agreement,
Reorganization Agreement and Shareholders' Agreement.
"Applicable Law" or "Applicable Laws" shall have the meaning ascribed
-------------- ---------------
to such terms in the Reorganization Agreement.
"Assembly, Test, Mark and Pack Agreement" shall mean the Assembly,
---------------------------------------
Test, Mark and Pack Agreement between AMD and the Company, to be dated as of the
Closing Date.
"Assumed Liabilities" shall have the meaning ascribed to such term in
-------------------
the Reorganization Agreement.
"Business" shall have the meaning ascribed to such term in the
--------
Reorganization Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
------------
day on which banking institutions in San Francisco, California are authorized or
obligated by law or executive order to be closed.
"Code" shall mean the Internal Revenue Code of 1986, as it may be
----
amended from time to time.
2
"Confidentiality Agreement" shall mean the confidentiality agreement
-------------------------
dated October 11, 1999, between AMD and LLC.
"Contract" shall have the meaning ascribed to such term in the
--------
Reorganization Agreement.
"CPD Assets" shall have the meaning ascribed to such term in the
----------
Reorganization Agreement.
"CPD Books and Records" shall have the meaning ascribed to such term
---------------------
in the Reorganization Agreement.
"CPD Employees" shall mean all employees of AMD who upon Closing will
-------------
be employed by the Company and any Inactive Employee, International Employee or
Visa Employee.
"CPD Intellectual Property" shall have the meaning ascribed to such
-------------------------
term in the Reorganization Agreement.
"CPD Inventory" shall have the meaning ascribed to such term in the
-------------
Reorganization Agreement.
"CPD Patents" shall have the meaning ascribed to such term in the
-----------
Reorganization Agreement.
"Disclosure Schedule" shall mean a schedule attached hereto and
-------------------
delivered by AMD to LLC which sets forth exceptions to the representations and
warranties contained in Article III hereof and certain other information called
for by Article III hereof and other provisions of this Agreement.
"Encumbrance" shall have the meaning ascribed to such term in the
-----------
Reorganization Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"ERISA Affiliate" of any Person means any other Person that, together
---------------
with such Person, would be treated as a single employer under Section 414 of the
Code.
"Financial Statements" shall mean the unaudited balance sheet as at,
--------------------
and the unaudited income statement for the year ending, December 26, 1999 of the
Business.
"Form 10-K" shall mean AMD's Annual Report on Form 10-K of for the
---------
fiscal year ended December 26, 1999.
"GAAP" shall mean United States generally accepted accounting
----
principles.
3
"Governmental Authority" shall have the meaning ascribed to such term
----------------------
in the Reorganization Agreement.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
-------
of 1976, as amended, and all applicable regulations promulgated thereunder.
"Inactive Employee" shall have the meaning ascribed to such term in
-----------------
the Reorganization Agreement.
"Indebtedness for Borrowed Money" of any Person shall mean, at any
-------------------------------
date, without duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person, properly recordable under GAAP as a
liability on the financial statements of such Person, evidenced by bonds,
debentures, notes, or other similar instruments, (iii) all Indebtedness for
Borrowed Money (as defined in clauses (i) and (ii) above) of others secured by a
lien on any asset of such Person, whether or not such Indebtedness for Borrowed
Money is assumed by such Person, and (iv) all Indebtedness for Borrowed Money
(as defined in clauses (i) and (ii) above) of others guaranteed by such Person.
"Intellectual Property" shall have the meaning ascribed to such term
---------------------
in the Reorganization Agreement.
"Intellectual Property Cross-License Agreement" shall mean the
---------------------------------------------
Intellectual Property Cross-License Agreement between AMD and the Company, to be
dated as of the Closing Date.
"Intellectual Property Laws" shall mean all Applicable Laws that
--------------------------
relate to or impose liability for infringement, misappropriation, dilution,
disparagement, unauthorized disclosure, or theft of: utility patents, design
patents, trademarks, service marks, trade names, trade dress, domain names,
logos, business and product names, slogans, and registrations; copyrights; mask
works; inventions, processes, designs, formulae, trade secrets or know-how.
"Intellectual Property Liabilities" shall mean any Liabilities related
---------------------------------
to products sold by AMD prior to the Closing Date, arising in connection with
the Business or the CPD Assets, which arise under or relate to any Intellectual
Property Laws.
"International Employee" shall have the meaning ascribed to such term
----------------------
in the Reorganization Agreement.
"Knowledge" shall mean, with respect to any Person, actual knowledge
---------
of any employee of such Person who is specified on Exhibit A hereto.
"Liabilities" shall have the meaning ascribed to such term in the
-----------
Reorganization Agreement.
"Losses" shall mean, in respect of any obligation to indemnify any
------
Person pursuant to Section 10.2(a) of this Agreement or the determination of the
limitations on liability
4
set forth in Section 10.3 of this Agreement, any and all actual losses, damages,
liabilities, obligations, judgments, settlements, awards, and offsets which the
Indemnified Party may suffer or incur (together, "Damages"), and reasonable out-
-------
of-pocket costs, expenses and attorneys' fees relating to Damages (including any
such reasonable costs, expenses and attorneys' fees incurred in enforcing such
right of indemnification against any Indemnifying Party or with respect to any
appeal) and penalties, if any, but shall not include (a) any such amounts for
which a reserve or allowance was recorded in the Audited Financial Statements or
(b) incidental, indirect or consequential damages or damages for lost profits,
other than any such incidental, indirect or consequential damages or damages for
lost profits claimed by any third party against any indemnified party pursuant
to Article X.
"Material Adverse Effect" shall mean a material adverse effect on the
-----------------------
Business, other than any such effect resulting from (a) an adverse trend or
trends in the market for the Company's products or the integrated circuit
industry as a whole or (b) general economic conditions.
"Patent Assignment Agreement" shall mean the Patent Assignment
---------------------------
Agreement between AMD and the Company, to be dated as of the Closing Date.
"Permits" shall have the meaning ascribed to such term in the
-------
Reorganization Agreement.
"Permitted Encumbrances" shall have the meaning ascribed to such term
----------------------
in the Reorganization Agreement.
"Person" shall have the meaning ascribed to such term in the
------
Reorganization Agreement.
"Preferred Stock" shall mean the Company's Series A Preferred Stock,
---------------
no par value per share.
"Reasonable Efforts" shall have the meaning ascribed to such term in
------------------
the Reorganization Agreement.
"Redemption Price" shall mean $95,000,000.
----------------
"Reorganization Agreement" shall mean the Reorganization Agreement
------------------------
dated as of the date hereof between AMD and the Company.
"Retained Liabilities" shall have the meaning ascribed to such term in
--------------------
the Reorganization Agreement.
"Shareholders' Agreement" shall mean the Shareholders' Agreement among
-----------------------
AMD, LLC and the Company, to be dated as of the Closing Date, in the form
attached hereto as Exhibit C.
"Signing Date" shall mean the date of this Agreement.
------------
5
"Wafer Fabrication Agreement" shall mean the Wafer Fabrication
---------------------------
Agreement between AMD and the Company, to be dated as of the Closing Date.
"Visa Employee" shall have the meaning ascribed to such term in the
-------------
Reorganization Agreement.
1.2 Other Defined Terms. The following terms shall have the meanings
-------------------
defined for such terms in the Sections set forth below:
Term Section
---- -------
AMD Preamble
AMD Indemnified Parties 10.2(a)
AMD Saving Plan 8.4(f)(i)
Audited Financial Statements 7.8
Balance Sheet 3.15
Claim 10.2(b)
Claim Notice 10.2(b)
Closing 2.4
Closing Date 2.4
COBRA 8.4(m)
Common Stock Recitals
Company Preamble
Company Affiliated Group 3.13(a)
Company DC Plan 8.4(f)(ii)
Consent Payments 5.4
Contract Consents 5.4
Financing 4.6
Financing Commitments 4.6
Hire Date 8.4(a)
Indemnified Party 10.2(b)
Indemnifying Party 10.2(b)
Leased Personal Property 3.14(c)
LLC Preamble
LLC Indemnified Parties 10.2(a)
Material Contracts 3.5(a)
Owned Personal Property 3.14(a)
Placement Agent Recitals
Plans and Programs 3.12(b)
Post-Closing Periods 9.1(c)
Pre-Closing Periods 9.1(b)
Property Taxes 9.1(c)
Purchased Common Shares 2.2
Purchased Preferred Shares 2.2
Redeemed Common Shares 2.3
6
Term Section
---- -------
Redemption Recitals
Required Consents 3.5(b)
Securities Act 4.9(a)
Senior Secured Lender Recitals
Senior Secured Loan Recitals
Stock Purchase Price 2.2
Straddle Periods 9.1(c)
Structuring 5.11
Survival Period 10.1
Tax 3.13(a)
Tax Claim 9.2
Tax Loss 9.2
Tax Returns 3.13(a)
Taxpayers 3.13(a)
Third-Party Claim 10.2(b)
Transfer Taxes 11.4
Transferred Employees 8.4(a)
WARN Act 4.7
7
ARTICLE II.
REORGANIZATION, RECAPITALIZATION AND REDEMPTION
2.1 Reorganization Agreement. AMD has heretofore operated the Business.
------------------------
Prior to the execution of this Agreement, AMD and the Company have entered into
the Reorganization Agreement pursuant to which (i) AMD will transfer to the
Company the CPD Assets not previously transferred to the Company and (ii) the
Company is being reorganized as set forth in the Reorganization Agreement. Upon
consummation of all of the transactions contemplated under the Reorganization
Agreement, the Business shall be owned and conducted by the Company.
2.2 Sale of the CPD Shares by AMD. Subject to the terms and conditions
-----------------------------
of this Agreement, at the Closing, AMD shall sell to LLC, and LLC shall purchase
from AMD, 90,000,000 shares of the Common Stock (the "Purchased Common Shares")
-----------------------
and 125,000 shares of the Preferred Stock (the "Purchased Preferred Shares"),
--------------------------
free and clear of all Encumbrances. The purchase price to be paid by LLC for
such shares shall be an aggregate of $280,000,000 (the "Stock Purchase Price").
--------------------
2.3 The Redemption. Subject to the terms and conditions of this
--------------
Agreement, at the Closing, AMD shall sell to the Company, and the Company shall
repurchase from AMD, 55,162,202 shares of the Common Stock (the "Redeemed Common
---------------
Shares"), free and clear of all Encumbrances, for the Redemption Price.
------
2.4 Payment of Creditors. At the Closing, AMD shall provide LLC with an
--------------------
estimate of accounts payable, sales commissions and royalties, in each case
which constitute Assumed Liabilities, of the Business as of the Closing Date,
and LLC shall provide AMD with a letter of credit in an amount equal to the
aggregate of such estimate of accounts payable, sales commissions and royalties,
which AMD will be able to draw upon to pay off each such liability that is not
paid by the Company when such liability is due. Upon payment of all accounts
payable, sales commissions and royalties the letter of credit shall terminate.
2.5 Closing. The Closing of the transactions contemplated herein (the
-------
"Closing") shall be held at 7:00 a.m., San Francisco City time, as soon as
-------
practicable following the satisfaction or waiver of all of the conditions to
Closing set forth in Articles VI and VII hereof but no earlier than July 22,
2000 unless otherwise agreed by the parties hereto (the "Closing Date") at the
------------
offices of Latham & Watkins, 135 Commonwealth Drive, Menlo Park, California.
2.6 Conveyances at Closing.
----------------------
(a) AMD and the Company Deliveries. To effect the transactions
------------------------------
contemplated hereby, at the Closing, AMD and the Company will deliver or cause
to be delivered to LLC:
8
(i) a complete set of all documents in connection with the
consummation of the transactions contemplated by the Reorganization
Agreement;
(ii) the resignation of all directors of the Company;
(iii) stock certificates representing the Purchased Common Shares and
the Purchased Preferred Shares; and
(iv) such other instruments, documents and certificates as LLC or
its counsel may reasonably request to implement the transactions
contemplated hereby.
(b) LLC Deliveries. To effect the transactions contemplated hereby, at
--------------
the Closing, LLC will deliver or cause to be delivered to AMD:
(i) the payment of the Stock Purchase Price by wire transfer in
immediately available funds; and
(ii) such other instruments, documents and certificates as AMD or
its counsel may reasonably request to implement the transactions
contemplated hereby.
(c) AMD Deliveries. To effect the transactions contemplated hereby, at
--------------
the Closing, AMD will deliver to the Company duly endorsed stock certificates
representing the Redeemed Common Shares.
(d) Company Deliveries. To effect the transactions contemplated hereby,
------------------
at the Closing, the Company will deliver to AMD the payment of the Redemption
Price by wire transfer in immediately available funds.
(e) Form of Instruments. To the extent that a form of any document to be
-------------------
delivered hereunder is not attached as an Exhibit hereto or to the
Reorganization Agreement, such documents shall be in form and substance, and
shall be executed and delivered in a manner, reasonably satisfactory to LLC, the
Company and AMD.
(f) Other Items. LLC and AMD shall deliver the other items described in
-----------
Articles VI and VII.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF AMD
To induce LLC to enter into this Agreement, AMD hereby makes the following
representations and warranties to LLC, except as otherwise set forth on the
Disclosure Schedule. Except for representations and warranties contained in this
Article III, AMD makes no representations, express or implied, written or oral,
with respect to AMD, the Company, the Business, the CPD Assets or otherwise.
Without limiting the generality of the foregoing sentence, AMD makes no
representation or warranty to LLC with respect to: (a) any projections,
estimates or budgets (or the likelihood of such projections, estimates or
budgets being achieved) of future revenues, expenses, expenditures, results of
operations of or other matters related to the
9
Business or the Company; or (b) except as expressly covered by a representation
and warranty contained in this Article III, any other information or documents
(financial or otherwise) made available to LLC or its counsel, accountants or
advisors with respect to the Company, the Business and/or the CPD Assets. For
purposes of the following representations and warranties, references to AMD
shall be deemed to include the Company, as applicable, with respect to the CPD
Assets and Assumed Liabilities being transferred as described in the
Reorganization Agreement.
3.1 Organization of AMD and the Company. AMD is duly incorporated and
-----------------------------------
validly existing as a corporation in good standing under the laws of the State
of Delaware and has full corporate power and corporate authority to conduct the
Business as it is presently being conducted and to own and lease the properties
and assets of the Business. The Company is duly incorporated and validly
existing as a corporation in good standing under the laws of the State of
California and has full corporate power and corporate authority to own and lease
its properties and assets.
The Company is, or prior to the Closing will be, duly qualified to do
business and is, or prior to the Closing will be, in good standing (or the
equivalent thereof) in each jurisdiction in the United States where the
character of the properties owned or leased or the nature of the activities
conducted by the Company make such qualification necessary, except where the
failure to be so qualified or in good standing will not have a Material Adverse
Effect. The Company does not own any securities or any other direct or indirect
interest in any Person.
3.2 Authorization. Each of AMD and the Company has the corporate power
-------------
and corporate authority to execute and deliver this Agreement and each of the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby, and all requisite corporate action has been
taken by each of AMD and the Company to authorize the execution, delivery and
performance of this Agreement and each of the Ancillary Agreements to which it
is a party. This Agreement has been duly executed and delivered by each of AMD
and the Company and, assuming the due authorization, execution and delivery of
this Agreement by LLC, is a valid and binding obligation of each of AMD and the
Company, enforceable against each of AMD and the Company in accordance with its
terms, except as the foregoing may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors, general principles
of equity (whether considered in an action at law or in equity) and the
discretion of the court before which any proceeding therefor may be brought.
3.3 Intellectual Property.
---------------------
(a) AMD owns, or is licensed or otherwise possesses legally enforceable
rights to transfer and use, all copyrights, copyright registrations, mask works
(registered and fixed but unregistered), trademarks, trade names and know how
material to the operation of the Business as currently conducted. AMD owns the
CPD Patents, free and clear of all material Encumbrances. AMD has taken
commercially reasonable measures to maintain the validity and enforceability of
the CPD Patents in all material respects, including payment of all required
fees.
10
To the Knowledge of AMD, no material judicial or administrative proceeding of
any kind is pending or has been threatened against AMD involving (a) the
ownership, validity, enforceability, infringement, misuse or misappropriation of
any CPD Patents or (b) the ownership, validity, enforceability, misuse, theft,
unauthorized use, disclosure or misappropriation of any CPD Intellectual
Property. AMD has no Knowledge of the infringement or misappropriation of the
CPD Patents by a third party. AMD has not received written notice of any
material infringement or material liability for the use of intellectual property
rights of others with respect to the CPD Intellectual Property within the last
three (3) years. AMD has not granted any license or right to use, option,
release or covenant not to sue or non-assertion assurance to any third person
with respect to, or granted any outstanding lien or security interest in, any of
the CPD Patents where such action would have a Material Adverse Effect.
(b) Section 3.3(b) of the Disclosure Schedule sets forth all material
registered trademarks and service marks used by AMD in the Business as currently
conducted.
(c) Section 3.3(c) of the Disclosure Schedule sets forth all material
unregistered trademarks, service marks, trade dress, and/or trade names used by
AMD in the Business as currently conducted.
(d) Section 3.3(d) of the Disclosure Schedule sets forth all material
registered copyrights used by AMD in the Business as currently conducted.
(e) Section 3.3(e) of the Disclosure Schedule sets forth all material
registered mask works used by AMD in the Business as currently conducted.
(f) Section 3.3(f) of the Disclosure Schedule sets forth all material
registered domain names used by AMD in the Business as currently conducted.
(g) To the Knowledge of AMD, no judicial or administrative proceeding of
any kind is pending or has been threatened against AMD with respect to the
Business involving rights to Intellectual Property of any third party. AMD has
not received written notification of any infringement or liability of any kind
relating to rights to Intellectual Property or patents of others with respect to
the operation of the Business within the last three (3) years. AMD has no
Knowledge of infringement of the Intellectual Property or patents of others with
respect to the operation of the Business.
(h) AMD will maintain the confidentiality of any trade secrets transferred
to the Company and impose the same non-disclosure and confidentiality
obligations and processes used by AMD to maintain the confidentiality of AMD
trade secrets.
3.4 Absence of Certain Changes or Events. Since December 26, 1999, the
------------------------------------
Business has been conducted in the ordinary course of business and there has not
been any:
(a) significant adverse change in the CPD Assets (including, without
limitation, writing down the value of inventory or writing off notes or accounts
receivable), the Assumed Liabilities, or in the financial condition or results
of operations of the Business, except
11
for (i) changes in the ordinary course of business and consistent with past
practice or (ii) changes contemplated hereby or relating to the transactions
contemplated hereby;
(b) sale, assignment or transfer of any CPD Asset which is material to the
Business, other than in the ordinary course of business;
(c) capital expenditures or the incurrence of liability therefor by AMD
involving payments in excess of $1,000,000 individually or $5,000,000 in the
aggregate on behalf of the Business;
(d) material physical damage, destruction or loss (whether or not covered
by insurance) affecting any CPD Assets;
(e) any cancellation, expiration, non-renewal or waiver of any right under
any Material Contract or material Permit, except in the ordinary course of
business,
(f) mortgage or pledge of, or any Encumbrance (other than Permitted
Encumbrances) placed on, any CPD Assets; or
(g) any other fact, event or condition of any character that will have, or
would reasonably be expected to have, a Material Adverse Effect or would
reasonably be expected to materially disrupt, interrupt, prevent or impair the
conduct of the Business.
3.5 Contracts and Commitments.
-------------------------
(a) Section 3.5(a) of the Disclosure Schedule sets forth a complete list of
each of the following Contracts as of the date hereof (collectively, the
"Material Contracts"):
------------------
(i) CPD Contract creating any partnership;
(ii) CPD Contract (including purchase orders, franchise agreements
and undertakings or commitments to any governmental or regulatory
authority) not made in the ordinary course of business;
(iii) Contracts of employment with CPD Employees (including without
limitation employment, change in control, golden parachute, severance or
similar agreements or arrangements and other CPD Contracts with CPD
Employees) and contracts for consulting services;
(iv) CPD Contracts consisting of sales commitments for integrated
circuit products in excess of $100,000;
(v) any other CPD Contract involving payments by AMD in excess of
$250,000 annually that are not cancelable on 30-days' notice by AMD,
without payment of penalty or premium;
12
(vi) CPD Contract relating to, or evidences of, or guarantees of,
or providing security for, Indebtedness for Borrowed Money;
(vii) material distribution, or similar contract relating to or
providing for the marketing and/or distribution of the products of the
Business to which AMD is a party or by which AMD is bound;
(viii) CPD Contract containing a covenant limiting the freedom of AMD
to engage in the Business or the transactions contemplated by the Ancillary
Agreements or to compete with any Person;
(ix) Licenses by AMD of third-party Intellectual Property material
to the Business; or
(x) Any other CPD Contract required by applicable law to be filed
by AMD with the U.S. Securities and Exchange Commission.
(b) All of the Material Contracts on Section 3.5(a) of the Disclosure
Schedule as of the date hereof are in full force and effect and constitute the
legal, valid and binding obligations of AMD and, to the Knowledge of AMD, of the
other parties thereto (except, in each case, as may be limited by bankruptcy,
reorganization, insolvency and similar laws of general application relating to
or affecting the enforcement of rights of creditors or the relief of debtors),
and to the Knowledge of AMD, no condition exists or event, act or omission has
occurred which, with or without notice, or lapse of time or both, would
constitute a default or a basis of force majeure or other claim of excusable
delay or nonperformance thereunder. Except for the consents of parties listed
on Section 3.5(b) of the Disclosure Schedule (the "Required Consents"), no
-----------------
consent of any party to the Material Contracts is required in connection with
the transactions contemplated by this Agreement and the Reorganization
Agreement. No other party to any Material Contract has notified AMD of the
assertion of its right to renegotiate the terms or conditions of any Material
Contract, and, to the Knowledge of AMD, no such basis exists.
3.6 No Conflict or Violation. Neither the execution and delivery of
------------------------
this Agreement or the Ancillary Agreements by AMD and the Company nor the
consummation of the transactions contemplated by this Agreement or the Ancillary
Agreements by AMD and the Company will (i) violate, conflict with or result in
any breach or default under any term or provision or result in the acceleration
of any Liability or cancellation or termination of or under any Material
Contract, (ii) result in the creation or imposition of any material Encumbrance
on any CPD Asset, (iii) result in any violation of the provisions of the charter
or bylaws of AMD or the Company or (iv) result in any material violation by AMD
of any Applicable Law or prohibit consummation by AMD of the transactions
contemplated by this Agreement.
3.7 Consents and Approvals. Except (a) for the filing of premerger
----------------------
notification reports under the HSR Act and (b) as set forth on Section 3.7 of
the Disclosure Schedule, no material consent, approval or authorization of any
governmental or regulatory authority, or any other Person, is required to be
made or obtained by AMD or the Company in
13
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
3.8 Financial Statements. The Financial Statements have been delivered
--------------------
to LLC by AMD. The Financial Statements were, and the Audited Financial
Statements will be, prepared in all material respects in accordance with the
books and records of the Business and in accordance with GAAP and fairly present
on a carve-out basis in all material respects the assets and liabilities and
results of operations of the Business as of the dates indicated or for the
periods indicated, in each case on the basis described in Note 1 to the Audited
Financial Statements, subject, in the case of the Financial Statements, to
normal year-end adjustments and the omission of footnotes.
3.9 Litigation. Except as set forth in the Form 10-K or in AMD's
----------
quarterly report on Form 10-Q for the quarter ended April 2, 2000, to the
Knowledge of AMD, there is no material Action pending or threatened against,
relating to or affecting (i) the Business, (ii) the CPD Assets or (iii) the
transactions contemplated by this Agreement. Neither AMD nor the Company is in
material default with respect to any judgment, order, writ, injunction or decree
of any court or governmental agency, and there are no unsatisfied judgments
against AMD or the Company, in each case relating to the Business.
3.10 Compliance with Law. To the Knowledge of AMD, each of AMD and the
-------------------
Company is, and for the period of the applicable statute of limitations has
been, in compliance with all Applicable Laws with respect to the Business,
except where the failure to comply would not have a Material Adverse Effect.
3.11 No Brokers. Except for the services of Donaldson, Lufkin & Jenrette
----------
and Salomon Smith Barney, which have been retained by AMD, neither AMD nor any
of its Affiliates has entered into or will enter into any contract, agreement,
arrangement or understanding with any Person which will result in the obligation
of LLC to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby. AMD is solely responsible
for any payment, fee or commission that may be due to Donaldson, Lufkin & Jenrette and Salomon Smith Barney in connection with the transactions
contemplated hereby.
3.12 Employee Benefit Plans.
----------------------
(a) There are no employment contracts or change in control, golden
parachute, severance or similar agreements or arrangements between AMD or the
Company and any of the CPD Employees. AMD will provide such information
concerning the CPD Employees as LLC may reasonably request, subject to AMD's
policies in effect at the time of the request with respect to providing
information about its employees to other potential employers.
(b) Section 3.12(b) of the Disclosure Schedule sets forth a true and
accurate list of all employee benefit plans and programs to which AMD is a party
and in which the CPD Employees participate immediately prior to the Signing Date
(the "Plans and Programs"). AMD has provided or made available to LLC copies of
------------------
the Plans and Programs (and, if applicable,
14
related trust agreements) and all amendments thereto and written interpretations
thereof distributed or made available to participants or beneficiaries together
with the most recent annual report (Form 5500 including, if applicable, Schedule
B thereto) and the most recent actuarial valuation report, if any, prepared in
connection with any Plan or Program. None of the Plans and Programs are
multiemployer plans (as defined in ERISA Section 3(37) or 4001(a)(3)) or
employee pension benefit plans (as defined in ERISA Section 3(2)) subject to
Title IV of ERISA.
(c) Neither the Company nor any ERISA Affiliate of the Company maintains or
contributes to, or within the past six years, has maintained or contributed to,
any plan or arrangement subject to Title IV of ERISA.
(d) Each Plan or Program that is intended to be qualified under Section
401(a) of the Code and each trust created under any such Plan or Program to be
exempt from tax under Section 501(a) of the Code has received a favorable
determination letter with respect to such qualified status from the Internal
Revenue Service or will be amended as requested by the Internal Revenue Service
within the remedial amendment period prescribed under Section 401(b) of the Code
so as to obtain such favorable determination. AMD has provided or made
available to LLC the most recent determination letter of the Internal Revenue
Service relating to each such Plan or Program. Each Plan or Program has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code.
(e) The Company does not have any current or projected liability in respect
of post-employment or post-retirement health or medical or life insurance
benefits for retired, former or current employees of the Company, except as
required to avoid excise tax under Section 4980B of the Code.
(f) No employee or former employee of the Company will become entitled to
any bonus, retirement, severance, job security or similar benefit or enhanced
such benefit (including acceleration of vesting or exercise of an incentive
award) as a result of the transactions contemplated hereby.
3.13 Tax Matters. The following representations are made as of the date
-----------
hereof and as of the Closing Date:
(a) Filing of Tax Returns. Each of (i) the Company and (ii) the affiliated
---------------------
group of corporations within the meaning of Section 1504(a) of the Code of which
the Company is a member and any similar state, local or foreign combined,
consolidated or affiliated group of which the Company is a member (the "Company
-------
Affiliated Groups," and, collectively with the Company, the "Taxpayers") has
----------------- ---------
timely filed with the appropriate Taxing or other governmental authorities all
returns, reports, estimates, information returns and statements (collectively,
"Tax Returns") required to be filed in respect of Taxes on or before the Closing
-----------
Date. For purposes of this Agreement, "Tax" means (i) any net income,
---
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license, registration,
recording, documentary, conveyancing, gains, withholding on amounts paid to or
by AMD or the Company, payroll, employment, excise, severance, stamp,
occupation, premium,
15
property, environmental or windfall profit tax, custom duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any governmental authority responsible for the imposition of any such
tax (domestic or foreign), (ii) in the case of the Company, liability for the
payment of any amount of they type described in clause (i) as a result of being
or having been before the Closing Date a member of an affiliated, consolidated,
combined or unitary group and (iii) liability for the payment of any amounts of
the type described in (i) as a result of being party to any agreement or any
express or implied obligation to indemnify any other Person. All such Tax
Returns are correct and complete in all material respects.
(b) Payment of Taxes. All Taxes of the Taxpayers, in respect of periods or
----------------
portions thereof ending on or prior the Closing Date, have been paid, or will
have been paid, or an adequate reserve has been established therefor in
conformity with GAAP. All Taxes that the Taxpayers have been required to
collect or withhold have been duly collected or withheld and, to the extent
required when due, have been or will be duly paid to the proper Taxing
authority.
(c) Encumbrances. There are no Encumbrances on any of the Assets of the
------------
Company that arose in connection with any Tax, other than for current Taxes not
yet due and payable.
(d) Audit History. There is no pending action, dispute or claim,
-------------
proceeding, investigation or audit concerning any Tax liability of the Taxpayers
for any taxable period during which the Company was a member. No Tax Returns of
the Company or of any Company Affiliated Group for any taxable period during
which the Company was a member have been audited or are currently the subject of
audit. There are no requests for rulings or determinations in respect of any
Tax pending between the Company and any Taxing authority. Neither the Company
nor any Company Affiliated Group has granted any extension or waiver of the
statute of limitations period applicable to any Tax Return, which period (after
giving effect to such extension or waiver) has not yet expired.
(e) Tax Elections. No new elections with respect to Taxes, or changes in
-------------
current elections with respect to Taxes, affecting the Company shall be made
after the date of this Agreement without LLC's prior consent, which consent
shall not be unreasonably withheld. Neither the Company nor any Company
Affiliated Group on behalf of the Company (i) has made or will make a consent
dividend election under Section 565 of the Code; (ii) has consented at any time
under Section 341(f)(1) of the Code to have the provisions of Section 341(f)(2)
of the Code apply to any disposition of the CPD Assets; (iii) has made an
election, or is required, to treat any CPD Asset as owned by another Person
pursuant to the provisions of Section 168(f) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986, or as tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the Code; or (iv) has made any of
the foregoing elections or is required to apply any of the foregoing rules under
any comparable foreign, state or local Tax provision.
16
(f) Prior Affiliated Groups. The Company has never been a member of an
-----------------------
affiliated group other than the Company Affiliated Groups the common parent of
which is AMD. The Company has no liability for the Taxes of any Person other
than the Company (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), (ii) as a transferee or successor,
(iii) by contract or (iv) otherwise.
(g) Tax Sharing Agreements. There are no, and at the Closing Date there
----------------------
will be no, tax-sharing agreements or similar arrangements with respect to or
involving the Company, and, after the Closing Date, the Company shall not be
bound by any such tax-sharing agreements or similar arrangements or have any
liability thereunder for amounts due in respect of periods prior to the Closing
Date.
(h) Partnerships and Single Member LLCs. The Company is not subject to any
-----------------------------------
joint venture, partnership, or other arrangement or contract which is treated as
a partnership for federal income tax purposes and does not own a single member
limited liability company which is treated as a disregarded entity.
(i) FIRPTA. For purposes of withholding under Section 1445 of the Code,
------
AMD is not a "foreign person" as defined in Section 1445(f)(3) of the Code.
(j) Section 280G. There is no contract, agreement, plan or arrangement
------------
covering any person providing services in respect of the Business that,
individually or in the aggregate, could give rise to the payment of any amount
that would result in the imposition of an excise tax under Section 4999 of the
Code or would not be deductible pursuant to Section 280G or 162(m) of the Code.
(k) Section 467 Rental Agreements. There are no Section 467 rental
-----------------------------
agreements for purposes of Section 467 of the Code and the Treasury Regulations
thereunder with respect to CPD Assets or the Assumed Liabilities.
3.14 Personal Property.
-----------------
(a) Section 3.14(a) of the Disclosure Schedule sets forth a list of all
material machinery, equipment, furniture, fixtures, and other items of tangible
personal property that are owned and used by AMD primarily in the Business (the
"Owned Personal Property").
-----------------------
(b) All of the Owned Personal Property is owned by AMD free and clear of
any Encumbrances, except for Permitted Encumbrances.
(c) Section 3.14(c) of the Disclosure Schedule sets forth a list of all
material machinery, equipment, furniture, fixtures, and other items of tangible
personal property that are leased by AMD and used primarily in the Business (the
"Leased Personal Property"), the leases for which are being assumed by the
------------------------
Company pursuant to the Reorganization Agreement.
17
(d) All of the Owned Personal Property and Leased Personal Property is
owned or leased by AMD. The Owned Personal Property and the Leased Personal
Property is, considered in the aggregate, in good operating condition, subject
only to ordinary wear and tear.
3.15 Inventory. The CPD Inventory consisting of finished goods set forth
---------
on the unaudited balance sheet of the Business at December 26, 1999 (the
"Balance Sheet") is, and the CPD Inventory consisting of finished goods as of
-------------
the Closing shall be, in good and marketable condition and salable in the normal
course of the Business, as currently conducted. The CPD Inventory on the Balance
Sheet is valued in accordance with GAAP and the historical inventory valuation
policies of the Business at the lower of cost or market, and allowances have
been established on the date of the Balance Sheet for slow moving, obsolete or
unusable inventories.
3.16 Permits. Section 3.16 of the Disclosure Schedule sets forth a list of
-------
all Permits issued to AMD and AMD has furnished to LLC a copy of each of such
Permits, and each such copy is correct and complete and includes any and all
modifications thereof. The Permits are in full force and effect; AMD is not in
material violation of any of the Permits; to the Knowledge of AMD, no
proceedings for the suspension or cancellation of any of the Permits is pending
or threatened; to the Knowledge of AMD, no condition exists which (with or
without notice, the passage of time or both) would constitute a material
violation of any of the Permits; and to the Knowledge of AMD, the Permits
constitute all material governmental licenses, permits, consents, approvals or
certificates required to be obtained or held by AMD in connection with the
operation of the Business as presently conducted.
3.17 Labor Relations.
---------------
(a) Neither AMD nor the Company is a party to any collective bargaining
agreement related to the Business, and none of the CPD Employees is a party to
any collective bargaining agreement.
(b) AMD, with respect to the CPD Employees, is in compliance in all
material respects with all Applicable Laws regarding employment practices, terms
and conditions of employment, and wages and hours; there is no unfair labor
practice complaint against AMD pending before the National Labor Relations Board
or any similar labor agency that has been delivered to AMD with respect to the
Business; and there is no labor strike, dispute, slowdown, representation
question or stoppage pending or threatened against or involving the Business.
3.18 Insurance. AMD maintains policies of insurance which insure the CPD
---------
Assets and the Business in commercially reasonable amounts for occurrences
normally insured against. There are no claims by AMD pending or, to the
Knowledge of AMD, threatened with respect to the CPD Assets or the Business
under said policies or disputes with underwriters, and all premiums due and
payable have been paid and all such policies are in full force and effect in
accordance with their respective terms.
3.19 Capitalization of the Company. The Company is authorized to issue
-----------------------------
750,000 shares of Common Stock and no shares of Preferred Stock. As of the date
hereof, there
18
are 25,000 shares of Common Stock issued and outstanding and no shares of
Preferred Stock issued and outstanding. As of the Closing Date, the Company will
be authorized to issue 200,000,000 shares of Common Stock and 200,000 shares of
Preferred Stock. Following the transactions contemplated by the Reorganization
Agreement, there will be 155,162,002 shares of Common Stock issued and
outstanding and 138,888 shares of Preferred Stock outstanding. All outstanding
shares of Common Stock are owned by AMD free and clear of all Encumbrances. As
of the date hereof there are, and at all times prior to the Closing there will
be, no outstanding options, conversion rights, warrants or other rights in
existence to acquire or to require the Company to issue, purchase or acquire any
shares of the capital stock or other securities of the Company, other than
pursuant to the Reorganization Agreement. The issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable.
3.20 Necessary Assets. AMD has made a good faith attempt to provide that
----------------
upon the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, the tangible assets and properties of the Company as of
the Closing Date (including rights under the Ancillary Agreements) will include
all of the material tangible assets and properties necessary for the conduct of
the Business as presently conducted.
3.21 Product Liability and Recalls.
-----------------------------
(a) To the Knowledge of AMD, there is, and for the past 12 months there
has been, no pending or threatened claim, action, suit, proceeding, arbitration
or investigation against AMD with respect to the Business for injury to person
or property of employees or any third parties suffered as a result of the sale
of any product, performance of any service by the Business, including claims
arising out of the alleged defective or unsafe nature of its products or
services.
(b) To the Knowledge of AMD, there is no pending or overtly threatened
recall or investigation of any product sold by the Business.
3.22 Related Party Transactions. None of AMD, senior management of the
--------------------------
Business, or any of AMD's Affiliates (which are not natural persons) either (i)
owns, directly or indirectly, on an individual or joint basis, any material
interest in, or serves as an officer or director of, any customer, competitor or
supplier of the Business or organization which has a Material Contract (in each
case as to any material interest or Material Contract of the Business which
shall survive the Closing Date) or (ii) has any Material Contract with the
Company which is not on arms-length terms (in each case as to any Material
Contract which shall survive the Closing Date).
3.23 Accounts Receivable. The accounts receivable of the Company at the
-------------------
Closing will represent good faith claims of the Company against debtors for
sales or other charges arising on or before the Closing. The accounts receivable
set forth on the Balance Sheet arose in the ordinary course of business; were
not, as of the date of the Balance Sheet subject to any material discount,
contingency, claim of offset or recoupment or counterclaim; and represented, as
of the date of the Balance Sheet, good faith claims against debtors for sales or
19
other charges. Reserves shown on the Balance Sheet were adequate as of the date
of the Balance Sheet and were calculated on a basis consistent with GAAP.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF LLC
To induce AMD to enter into this Agreement, LLC hereby makes the following
representations and warranties to AMD.
4.1 Organization of LLC. LLC is duly organized and validly existing as a
-------------------
limited liability company in good standing under the laws of the State of
Delaware and has full power and authority to conduct its business as it is
presently being conducted and to own and lease its properties.
4.2 Authorization. LLC has the power and authority to execute and deliver
-------------
this Agreement and each of the Ancillary Agreements to which it is a party and
to consummate the transactions contemplated hereby and thereby, and all
requisite corporate action has been taken by LLC to authorize the execution,
delivery and performance of this Agreement and each of the Ancillary Agreements
to which it is a party. This Agreement has been duly executed and delivered by
LLC and, assuming the due execution of this Agreement by AMD, is a valid and
binding obligation of LLC, enforceable against LLC in accordance with its terms,
except as the foregoing may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights and remedies of creditors, general
principles of equity (whether considered in an action at law or in equity) and
the discretion of the court before which any proceeding therefor may be brought.
4.3 Consents and Approvals. No consent, approval or authorization of any
----------------------
Governmental Authority or any other Person is required to be made or obtained by
LLC or any of its Affiliates in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby other than the filings required under the HSR Act.
4.4 No Brokers. Except for the services of Morgan Stanley Dean Witter,
----------
which has been retained by LLC, and except for fees not to exceed $30,000,000 in
the aggregate, which will be paid by the Company immediately following the
Closing, neither LLC nor any of its Affiliates has entered into or will enter
into any agreement, arrangement or understanding with any Person which will
result in the obligation of LLC, AMD or the Company to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
contemplated hereby.
4.5 No Conflict or Violation. Neither the execution and delivery of this
------------------------
Agreement nor the Ancillary Agreements nor the consummation of the transactions
contemplated hereby or thereby will result in (a) a violation of or a conflict
with any provision of the charter or other organizational documents of LLC, (b)
a breach of, or a default under, any term or provision of any contract or
agreement to which LLC is a party, which breach or default would prevent LLC
from consummating the transactions contemplated hereby, or (c) a violation by
LLC of any
20
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction,
decree or award, which violation would prevent LLC from consummating the
transactions contemplated hereby.
4.6 Financing Arrangements. Prior to the date hereof, LLC has delivered
----------------------
to AMD true and correct copies of the commitment letter and certain related
documents set forth in Exhibit B from the financing sources identified therein,
which provide for the financing of the transactions contemplated hereby (the
"Financing Commitments"). The Financing Commitments are binding commitments and
---------------------
have not been amended or modified or withdrawn or rescinded in any respect; and
AMD is not aware of any fact, event or circumstance which would have a
detrimental effect on the ability to consummate the financing contemplated by
the Financing Commitments. The funds committed under the Financing Commitments,
together with the funds to be paid by LLC to purchase the Purchased Common
Shares and the Purchased Preferred Shares, are sufficient to enable the Company
and LLC to pay the Redemption Price and the Stock Purchase Price, as applicable,
to pay all related fees and expenses of LLC in connection with the transactions
contemplated hereunder and to provide for the anticipated working capital needs
of the Company following the consummation of the transactions contemplated
hereunder (the financing necessary to provide such funds being hereinafter
referred to as the "Financing"). The Financing Commitments are in full force and
---------
effect as of the date hereof. There are no conditions precedent or other
contingencies related to the funding of the full amount of the Financing other
than as set forth in or contemplated by the Financing Commitments. All fees
required to be paid by LLC on or prior to the date hereof in respect of the
Financing Commitments have been paid. A true and correct schedule of sources and
uses of the funds to be received in the Financing are set forth in Exhibit B.
4.7 WARN Act. LLC is not planning or contemplating, and has not made or
--------
taken, any decisions or actions concerning the Business after the Closing that
would require the service of notice under the Worker Adjustment and Retraining
Act of 1988 (the "WARN Act").
--------
4.8 Litigation. To the knowledge of LLC, there are no Actions pending or
----------
threatened (i) against LLC or any of its Affiliates which if adversely
determined would materially hinder or impair the ability of LLC to perform its
obligations under this Agreement or (ii) that seek to enjoin or obtain damages
(which damages could reasonably be expected to have a material adverse change in
or effect upon LLC) in respect of the consummation of the transactions
contemplated hereby. None of LLC or any of its Affiliates is subject to any
outstanding orders, rulings, judgments or decrees that would have a material
adverse effect on the ability of LLC to perform its obligations under this
Agreement.
4.9 Securities Matters. (a) LLC is aware of the business affairs and
------------------
financial condition of the Business, and has acquired sufficient information
about the Company and the Business to reach an informed and knowledgeable
decision to acquire the Purchased Common Shares and the Purchased Preferred
Shares. LLC is purchasing the Purchased Common Shares and the Purchased
Preferred Shares for its own account for investment purposes only and not with a
view to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act").
--------------
21
(b) LLC understands that the Purchased Common Shares and the Purchased
Preferred Shares have not been registered under the Securities Act in reliance
upon a specific exemption therefor, which exemption depends upon, among other
things, the bona fide nature of LLC's investment intent as expressed herein.
(c) LLC further understands that the Purchased Common Shares and the
Purchased Preferred Shares must be held indefinitely unless subsequently
registered under the Securities Act or unless an exemption from registration is
otherwise available. In addition, LLC understands that the certificates
evidencing the Purchased Common Shares and the Purchased Preferred Shares will
be imprinted with the legend referred to in the Shareholders' Agreement.
(d) LLC is aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions, if applicable, including, among other
things: (i) the availability of certain public information about the Company;
(ii) the resale occurring not less than one year after the party has purchased
and paid for the securities to be sold; (iii) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934, as amended) and the amount of securities being sold during any three-month
period not exceeding the specified limitations stated therein.
(e) LLC represents that it is an "accredited investor" as that term is
defined in Rule 501 of Regulation D under the Securities Act or any successor
regulation thereunder.
ARTICLE V.
ACTIONS BY AMD AND LLC
PRIOR TO THE CLOSING
5.1 Maintenance of Business. AMD covenants that, prior to the Closing,
-----------------------
except as may be agreed to in writing by AMD and LLC, it shall conduct the
Business, in all material respects, according to its ordinary and usual course
of business and consistent with AMD's prior practices. Without limiting the
generality of the foregoing, AMD shall: (a) maintain in effect and fully perform
all of its obligations under the Material Contracts in accordance with the terms
thereof; (b) give prompt notice to LLC of any notice given or received by AMD of
any default or breach or alleged default or breach under any of the Material
Contracts and of any claim or threat, of which AMD may have Knowledge, to
commence any action, suit, proceeding, or investigation against AMD with respect
to the Business; (c) protect and maintain in effect the CPD Intellectual
Property in accordance with past practices; (d) maintain in full force and
effect all insurance policies currently in effect with respect to the CPD
Assets, or policies that provide coverage that is comparable to such insurance
policies; (e) not hire or fire employees of the Business other than in the
ordinary course of business; and (f) use all Reasonable Efforts to consummate
the transactions contemplated by the Reorganization Agreement in accordance with
the terms of the Reorganization Agreement.
22
5.2 Certain Prohibited Transactions. AMD covenants that except as may be
-------------------------------
required by contract or law, and except as contemplated by Section 5.2 of the
Disclosure Schedule, it shall use its Reasonable Efforts not to, without the
prior written approval of LLC (other than pursuant to the Reorganization
Agreement):
(a) mortgage, pledge or allow any Encumbrance (other than Permitted
Encumbrances) on any CPD Assets;
(b) create, incur, assume or guarantee any Indebtedness for Borrowed
Money that would be an Assumed Liability;
(c) except in the ordinary course of business, sell, assign or transfer
any of the CPD Assets;
(d) make any capital expenditure or incur any commitment or liability
therefor, individually or in the aggregate, involving payments in excess of
$1,000,000 individually or $5,000,000 in the aggregate on behalf of the
Business;
(e) enter into or terminate any Material Contract with respect to the
Business outside the ordinary course of business or amend, modify or agree to
amend or modify any Material Contract outside the ordinary course of business;
(f) except as set forth on Section 5.2 of the Disclosure Schedule, enter
into any new employment or management agreement with any CPD Employee;
(g) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest in the Company, other than to AMD;
(h) amend any of the Ancillary Agreements; or
(i) enter into any agreement or commitment to do any of the actions set
forth in (a) - (h) above.
5.3 Access. Prior to the Closing, AMD shall provide LLC with reasonable
------
access during normal business hours to the CPD Assets, to Building 312 and to
AMD's employees, officers, agents and consultants, books and records
compensation and employee benefit plan documents, and such other information, in
each case relating to the Business and the CPD Employees subject to its existing
policies with respect to providing information about its employees to other
potential employers, as LLC may reasonably request. LLC shall use its Reasonable
Efforts to minimize any disruption to AMD's business in connection with the
conduct of the process contemplated herein, and AMD shall receive reasonable
advance notice of and shall have the right to participate in, any discussions
LLC might have with any federal or state regulatory authorities about AMD or the
Business. Notwithstanding anything in this Section 5.3 to the contrary, under no
circumstances shall AMD be required to provide to LLC or
23
its representatives, access to its Tax Returns or any information or materials
required to be kept confidential pursuant to agreements with third parties or by
law or subject to entering into appropriate agreements that preserve the
privilege, any privileged attorney-client communications or work product of AMD.
5.4 Consents and Reasonable Efforts. As soon as practicable, LLC and AMD
-------------------------------
shall make all filings required under the HSR Act. In addition, LLC and AMD will
each furnish all information as may be required by any state regulatory agency
properly asserting jurisdiction or by the Federal Trade Commission and the
United States Department of Justice under the HSR Act in order that the
requisite approvals for the transactions contemplated hereby be obtained or to
cause any applicable waiting periods to expire. AMD and the Company shall each
pay half of the $45,000 initial filing fee under the HSR Act. AMD shall use its
Reasonable Efforts to obtain prior to the Closing Date the Required Consents,
and any other consents, approvals, authorizations and agreements of and to give
all notices and make all other filings with, any third parties, including
Governmental Authorities, necessary to authorize, permit or approve the
consummation of the transactions contemplated hereby. In addition, subject to
the terms and conditions herein provided, each of the parties hereto covenants
and agrees to use its Reasonable Efforts to take, or cause to be taken, all
action or do, or cause to be done, all things necessary, proper or appropriate
to consummate and make effective the transactions contemplated hereby and to
cause the fulfillment of the parties' obligations hereunder. AMD and the Company
shall also use their Reasonable Efforts (before, and as reasonably necessary
after, the Closing) to obtain consents (the "Contract Consents") to assign the
-----------------
contracts set forth on Schedule 5.4 pursuant to the Reorganization Agreement in
such a manner as to reasonably minimize any increases in ongoing royalty
payments pursuant to such contracts. AMD shall pay the first $500,000 of any
Consent Payments, the Company shall pay the second $500,000 of any Consent
Payments, and AMD shall pay any Consent Payments in excess of $1,000,000. For
purposes of this Section, "Consent Payments" shall mean any one-time payments
----------------
to obtain the Contract Consents (but excluding ongoing payments, such as royalty
payments).
5.5 Supplement to Schedules. After the date hereof, AMD shall, from time
-----------------------
to time prior to or at the Closing, by notice to LLC, supplement or amend any
Section of the Disclosure Schedule, including without limitation, one or more
supplements or amendments thereto, to correct any matter which would constitute
a breach of any representation or warranty set forth herein. Such supplemental
or amended Schedule shall not be deemed to cure any breach of such
representation or warranty for the purposes of Article VII hereof. If, however,
the Closing occurs, such supplemental or amended Schedule shall be effective to
cure and correct for all purposes any breach of any representation or warranty
that would have existed by reason of AMD not having made such supplement or
amendment.
5.6 Financing. LLC shall use its Reasonable Efforts to have the Company
---------
enter into definitive financing agreements with respect to the Financing, and to
do all such acts and things reasonably necessary to consummate the Financing.
5.7 Exclusivity. Unless and until this Agreement is terminated pursuant
-----------
to Section 11.1, neither AMD nor any of its Affiliates, officers, directors,
employees or agents will
24
(a) solicit, initiate, or encourage the submission of any proposal or offer from
any person relating to any (i) liquidation, dissolution, or recapitalization,
(ii) merger or consolidation, (iii) acquisition or purchase of securities or
assets, or (iv) similar transaction or business combination, in each case
involving all or any material portion of the Business; or (b) participate in any
discussion or negotiations regarding, furnish any information with respect to,
assist or participate in, or agree to or endorse in any other manner any effort
or attempt by any Person to do or seek any of the foregoing.
5.8 Company Directors. Immediately following LLC's acquisition of the
-----------------
Purchased Common Shares and the Purchased Preferred Shares, but prior to the
Redemption, LLC shall cause two representatives of LLC to be appointed as the
sole members of the Company's board of directors and shall cause such
individuals to approve the Senior Secured Loan and the Redemption.
5.9 Solvency Opinion. LLC shall use its Reasonable Efforts to provide
----------------
information reasonably requested by AMD to enable AMD and the Company to obtain
an opinion addressed to the Board of Directors of the Company and AMD which
provides the Company and AMD with reasonable assurance that the transactions
contemplated by this Agreement do not result in a violation of California
fraudulent conveyance laws or Section 548 of the U.S. Bankruptcy Code.
5.10 Accounts Receivable. AMD will deliver to LLC, as soon as reasonably
-------------------
practicable following the date hereof, a complete and accurate aging list of the
accounts receivable of the Company as of December 26, 1999 and April 2, 2000 and
will deliver a complete and shall use its Reasonable Efforts to deliver to LLC
an accurate aging list of the accounts receivable of the Company as of June 30,
2000 prior to, or as soon as reasonably practicable after, the Closing Date.
5.11 Cooperation in Structuring Subsidiaries. In establishing the
---------------------------------------
subsidiaries and branches and in completing the transfers enumerated in Sections
2.2 through 2.8 of the Reorganization Agreement (the "Structuring"), AMD and LLC
-----------
shall use their Reasonable Efforts to complete the Structuring in a tax
efficient manner for both parties.
5.12 Schedule Relating to CPD Patents. As soon as reasonably practicable
--------------------------------
after the Signing Date, AMD shall provide LLC with a schedule of all significant
licenses, rights to use, options, releases, covenants not to sue, non-assertion
assurances and outstanding liens or security interests that AMD has granted to
any third person with respect to any of the CPD Patents.
5.13 Sublicense. AMD shall sublicense the Company to the licenses granted
----------
under the Patent License Agreement between Lucent Technologies GRL Corp. and
Advanced Micro Devices, Inc., effective January 1, 1998, and under the PLA
referenced therein to the fullest extent permitted under Article 4.02(b)
thereof. The Company shall make quarterly royalty payments to AMD based on the
Company's quarterly net revenues and the actual royalty rate set forth in such
agreement, and shall in no event be liable for royalty payments in excess of
25
$337,000 a year. The Company shall pay such royalty payments to AMD no later
than 45 days following the end of each quarter.
5.14 IBM License. AMD and the Company shall, as soon as practicable after
-----------
the Closing Date, jointly request in writing that IBM grant a license to the
Company that licenses the Company for a field commensurate in breadth with the
Newco Exclusive Field (as defined in the Intellectual Property Cross-License
Agreement) pursuant to Section 2.8 of the License Agreement between IBM and AMD,
effective January 1, 1997.
ARTICLE VI.
CONDITIONS TO THE OBLIGATIONS OF AMD
The obligations of AMD to consummate the transactions contemplated hereby
on the Closing Date are subject to the satisfaction or waiver (in the discretion
of AMD), on or prior to the Closing Date, of each of the following conditions:
6.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of LLC contained in this Agreement shall be true and correct
(disregarding all exceptions therein for materiality and material adverse
effects) as of the date of this Agreement and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date, with
such exceptions in each case as would not have a material adverse effect on LLC,
and LLC shall have performed in all material respects all agreements and
covenants required hereby to be performed by it prior to or at the Closing Date.
6.2 Consents. All consents, approvals and waivers from Governmental
--------
Authorities and other Persons set forth on Schedule 6.2 shall have been
obtained.
6.3 No Injunction or Restraints. No temporary restraining order,
---------------------------
preliminary or permanent injunction or other order, decree or judgment issued by
a Governmental Authority of competent jurisdiction shall be in effect and have
the effect of making the transactions contemplated by this Agreement illegal or
otherwise prohibiting the sale of the Business; provided, however, that the
provisions of this Section shall not be available to AMD if it does not use its
Reasonable Efforts to resist, resolve or lift such injunction or other order.
6.4 HSR Act. The applicable waiting period, including any extension
-------
thereof, under the HSR Act shall have expired or otherwise been terminated.
6.5 Reorganization Agreement. The transactions contemplated by the
------------------------
Reorganization Agreement shall have been consummated in substantially the manner
contemplated by the Reorganization Agreement.
6.6 Execution of Ancillary Agreements. Each of the Ancillary Agreements
---------------------------------
shall have been duly executed and delivered by each party thereto other than AMD
and the Company.
26
6.7 California Redemption Matters. The Senior Secured Lender, pursuant
-----------------------------
to and for purposes of California General Corporation Law Section 506(b), shall
have consented to the transactions contemplated by this Agreement.
ARTICLE VII.
CONDITIONS TO THE OBLIGATIONS
OF LLC
The obligations of LLC to consummate the transactions contemplated hereby
are subject to the satisfaction or waiver (in the discretion of LLC), on or
prior to the Closing Date, of each of the following conditions:
7.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of AMD contained in this Agreement shall be true and correct
(disregarding all exceptions therein for materiality and material adverse
effects) as of the date of this Agreement and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date, with
such exceptions in each case as would not have a Material Adverse Effect, and
AMD shall have performed in all material respects all agreements and covenants
required hereby to be performed by it prior to or at the Closing Date.
7.2 Consents. All (a) Required Consents and (b) other consents, approvals
--------
and waivers from Governmental Authorities and other Persons necessary to permit
LLC to consummate the transactions contemplated hereby or necessary to avoid a
breach of, default under or termination of any Material Contract or Permit shall
have been obtained, unless the failure to obtain any such Required Consent or
other consent, approval or waiver would not have a Material Adverse Effect. All
consents or approvals set forth on Section 7.2 of the Disclosure Schedule shall
have been obtained.
7.3 No Injunction or Restraints. No temporary restraining order,
---------------------------
preliminary or permanent injunction or other order, decree or judgment issued by
a Governmental Authority of competent jurisdiction shall be in effect and have
the effect of making the transactions contemplated by this Agreement illegal or
otherwise prohibiting the sale of the Business; provided, however, that the
provisions of this Section shall not be available to LLC if it does not use its
Reasonable Efforts to resist, resolve or lift such injunction or other order.
7.4 HSR Act. The applicable waiting period, including any extension
-------
thereof, under the HSR Act shall have expired or otherwise been terminated.
7.5 Execution of Ancillary Agreements. Each of the Ancillary Agreements
---------------------------------
shall have been duly executed and delivered by each party thereto other than
LLC.
7.6 Reorganization Agreement. The transactions contemplated by the
------------------------
Reorganization Agreement shall have been consummated in substantially the manner
contemplated by the Reorganization Agreement.
27
7.7 Financing. The conditions to the funding contemplated by the
---------
Financing Commitments with respect to the Financing shall have been satisfied in
full or waived, and the cash contemplated by such Financing Commitments shall
have been provided or made available to the Company and/or LLC.
7.8 Delivery of Audited Financial Statements. AMD shall have delivered to
----------------------------------------
LLC the audited balance sheet of the Business as of December 26, 1999, and
audited income statement and statement of cash flows of the Business for the
year ended December 26, 1999, each prepared in accordance with GAAP on a carve-
out basis (the "Audited Financial Statements").
----------------------------
7.9 Delivery of Tax Forms. AMD shall have delivered to LLC at the Closing
---------------------
a certificate in form and substance reasonably satisfactory to LLC, duly
executed and acknowledged, certifying any facts that would exempt the
transactions contemplated hereby from withholding pursuant to the provisions of
the Foreign Investment in Real Property Tax Act.
ARTICLE VIII.
ACTIONS BY AMD AND LLC AFTER THE CLOSING
8.1 Books and Records. AMD, the Company and LLC agree that so long as any
-----------------
CPD Books and Records, to the extent that they pertain to the operations of the
Business prior to the Closing Date, remain in existence and available, each
party (at its expense) shall have the right to inspect and to make copies of the
same upon reasonable written notice at any time during business hours for any
proper purpose.
8.2 Further Assurances. On and after the Closing Date, AMD, the Company
------------------
and LLC will take all appropriate action and execute all documents, instruments
or conveyances of any kind which may be reasonably necessary or advisable to
carry out any of the provisions hereof. In addition, AMD and LLC agree to notify
the other party of any audit, notice, assessment or other action affecting Taxes
relating to the transactions contemplated by this Agreement.
8.3 WARN Act. LLC agrees that it will not take any action which causes
--------
the notice provisions of the WARN Act to be applicable to AMD or the Company in
connection with the transactions contemplated by this Agreement.
8.4 Employees and Employee Benefits.
-------------------------------
(a) Effective as of the Closing Date, LLC will, in connection with its
acquisition of the Business, cause the Company to employ each CPD Employee (the
"Transferred Employees") at the same or substantially comparable total
---------------------
compensation (including base salary and bonus but excluding stock-based
compensation and any stay bonus or retention payments) as in effect immediately
prior to the Closing. Such Transferred Employees shall become employees of the
Company effective at 12:01 a.m. Pacific Standard Time on the Closing Date,
except as set forth in Section 8.4(b) or (c) (such date of hire by the Company
referred to herein as the "Hire Date").
---------
28
(b) LLC agrees to cause the Company to offer each Inactive Employee
employment under the terms applicable to Transferred Employees when the Company
is notified that such person will return to work. If the offer is accepted,
such person shall be treated as a Transferred Employee for all purposes under
this Agreement. Until any such employee returns to active employment with the
Company, AMD shall be responsible for such employee's salary and benefits
including, without limitation, disability benefits.
(c) LLC agrees to cause the Company to offer each International
Employee and Visa Employee employment under the terms applicable to Transferred
Employees as soon as practicable following the Closing Date. If the offer is
accepted, such person shall be treated as a Transferred Employee for all
purposes under this Agreement. Until such date, the parties agree to enter into
an appropriate secondment agreement or other reasonable arrangement for the
availability of such International Employees and Visa Employees to the Company.
(d) During the period between the date hereof and the Closing Date,
AMD will use its Reasonable Efforts to ensure that certain AMD employees
mutually agreed upon by AMD and LLC are available for interview by LLC (acting
on behalf of the Company) for possible employment with the Company following the
Closing Date, and the Company (with LLC's consent), in its discretion, may make
offers of employment to any of such employees.
(e) The Company shall not assume, and AMD shall retain all
obligations to fund or otherwise shall provide all benefits in respect of or
payable under, AMD's Plans and Programs. No assets or liabilities of any of
AMD's Plans and Programs shall be transferred from such Plans and Programs to
any plan maintained or established by the Company, except for the AMD Flexible
Benefits Plan and the flexible spending accounts under such plan or as set forth
under Section 8.4(f).
(f) (i) No later than the Closing Date, effective as of the Closing
Date, AMD shall amend its defined contribution plan in which Transferred
Employees participate (the "AMD Saving Plan") to cause the account balances of
---------------
each Transferred Employee thereunder to vest as of each employee's respective
Hire Date and to cause their active participation in the AMD Saving Plan to
cease as of their respective Hire Dates.
(ii) Unless LLC (acting on behalf of the Company) elects the
option set forth in subsection (iii) of this Section no later than the Closing
Date, AMD shall take any steps necessary to permit the Transferred Employees to
receive a distribution of their accrued benefits from the AMD Saving Plan as a
result of transactions contemplated by this Agreement, provided the terms of
such plan would permit such a distribution. On or following the Closing Date,
the savings plan of the Company or one of its Affiliates (the "Company DC Plan")
---------------
shall (if elected by the Transferred Employees) accept individual rollovers in
cash and, if permitted, promissory notes reflecting participants' loans under
the AMD Saving Plan of Transferred Employees' distributions from the AMD Saving
Plan, subject to the terms and conditions of the Company DC Plan and applicable
law. The Company's obligations under this subsection (ii) are contingent upon
receipt by the Company of a favorable determination letter or AMD's
29
certification to the Company, in a manner reasonably acceptable to the Company,
that the AMD Saving Plan is qualified under the applicable provisions of the
Code.
(iii) LLC (on behalf of the Company) may elect at its option no
later than the Closing Date, in lieu of the distribution provided for in
subsection (ii) of this Section, as soon as practicable following receipt by AMD
and the Company of favorable determination letters relating to the AMD Saving
Plan or Company DC Plan being qualified under the applicable provision of the
Code, to have AMD cause the trustee of the AMD Saving Plan to transfer assets
representing the full account balances of the Transferred Employees, together
with the appropriate net investment return (including unrealized appreciation or
depreciation) thereon, if applicable, reduced by any necessary benefit or
withdrawal payments made in respect of Transferred Employees prior to the actual
date of transfer, to the trustee of the Company DC Plan. The assets to be
transferred from the trust under the AMD Saving Plan pursuant to this Section
8.4(f) shall be in cash or, to the extent mutually agreed to by AMD and the
Company, a combination of cash, securities and other property; provided,
however, that any outstanding loans attributable to the accounts of the
Transferred Employees shall be transferred in kind, if transferred, the actual
amount transferred from the trust under the AMD Saving Plan shall be adjusted to
reflect any normal and reasonable administrative expenses properly attributable
to the accounts of the Transferred Employees during the period following the
Closing Date. At the time the assets that are held in the trust with respect to
the Transferred Employees under the AMD Saving Plan are paid to the trust under
the Company DC Plan, the Company DC Plan shall assume all liabilities of the AMD
Saving Plan for the applicable benefits so transferred, and such transfer shall
be in full discharge of all obligations of the AMD Saving Plan in respect
thereof. If elected, this transfer shall take place as soon as practicable.
During the period following the Closing Date and preceding the transfer of
assets and liabilities pursuant to this Section 8.4(f)(iii), (1) AMD shall take
such action as is necessary to prevent a default by any Transferred Employee
with an outstanding loan from the AMD Saving Plan unless and until such
Transferred Employee fails to make a timely payment on such loan and (2) the
Company will cooperate with and assist AMD or its designee in the continued
administration of the AMD Saving Plan, including, subject to the consent of the
Transferred Employee, collecting and remitting to the trustee of the AMD Saving
Plan payroll deductions relating to any outstanding loans. Notwithstanding the
above, the amount transferred to the trust under the Company DC Plan shall in no
event be less than the amount necessary to satisfy the requirements of Section
414(1) of the Code and ERISA. If the Company elects such option, on or
immediately prior to the Closing Date, the Company shall (i) establish or
designate one or more of the Company DC Plan, and furnish AMD with the most
recent favorable determination letter from the Internal Revenue Service relating
to the Company DC Plan or certification, in a manner reasonably acceptable to
AMD, that the Company DC Plan is qualified under applicable provisions of the
Code as promptly as practicable, (ii) take any necessary action to qualify the
Company DC Plan under the applicable provisions of the Code and (iii) make all
filings and submissions to appropriate governmental agencies required of it in
connection with a transfer of assets as described herein.
(g) LLC shall cause the Company to take all action reasonably
necessary and appropriate to provide that Transferred Employees shall, effective
as of the Hire Date (but subject to subsections (i) and (j)), be entitled to
participate in plans or programs established or
30
amended by the Company that provide coverages and benefits which in the
aggregate are substantially comparable to the coverages and benefits provided by
the Plans and Programs of AMD in which such Transferred Employees participated
immediately prior to the Closing Date.
(h) To the extent the Company is unable to establish health and/or
dental plans and programs in accordance with this Section, the parties mutually
agree to cooperate to execute an arrangement pursuant to which AMD will use its
Reasonable Efforts to provide such health and/or dental benefits to Transferred
Employees for a transitional period not to exceed sixty (60) days following the
Closing Date at a cost consistent with the historical costs associated with such
benefit plans plus certain administrative fees. The cost of such coverage and
fees shall promptly be paid to AMD by the Company.
(i) Subject to restrictions and limitations imposed by Applicable
Law, LLC shall cause the Company to (i) make participation in employee welfare
benefit plans available to Transferred Employees on the Hire Date or as soon as
practicable thereafter and (ii) cause its employee welfare benefit plans and
programs to provide coverage to the Transferred Employees without regard to any
waiting period, evidence and requirement of insurability, preexisting condition,
actively at work requirement or exclusion or limitation (except to the extent
and in the manner any such waiting period, evidence and requirement of
insurability, preexisting condition, actively at work requirement or exclusion
or limitation applies immediately prior to the Closing).
(j) Subject to restrictions and limitations imposed by Applicable
Law, LLC agrees to cause the Company to (i) for purposes of determining
eligibility to become a participant in its employee pension benefit plans and
programs and its employee welfare benefit plans and programs, to treat a
Transferred Employee's service with AMD or any of its predecessors or affiliates
since last date of hire through the Hire Date as service with the Company, (ii)
for purposes of determining vesting in its employee pension benefit plans and
programs, to treat a Transferred Employee's service with AMD or any of its
predecessors or affiliates since last date of hire through the Hire Date as
service with the Company and (iii) for purposes of vacations, seniority and
other programs and benefits which consider service, to treat a Transferred
Employee's service with AMD or any of its predecessors or affiliates since last
date of hire through the Hire Date as service with the Company.
(k) AMD agrees to provide LLC and the Company with such records as
LLC may reasonably request regarding service of and participation by the CPD
Employees prior to the Hire Date in AMD's Plans and Programs.
(l) No provision in this Agreement shall create any third party
beneficiary rights in any CPD Employee or Transferred Employee (or any
beneficiaries, dependents, or collective bargaining representatives thereof),
with respect to the terms and conditions of employment of any such CPD Employee
or Transferred Employee, including, but not limited to, the type or level of
compensation or benefits provided by LLC, the Company or AMD.
(m) The Company shall be liable for continuation of health care
coverage required by Code Section 4980B and ERISA Sections 601 through 608
("COBRA") with respect to any "qualifying event" (as defined in Section
-----
4980B(f)(3) of the Code) with respect to a
31
Transferred Employee (and covered family members of a Transferred Employee)
occurring after such employee's respective Hire Date, including termination. AMD
shall be liable for health care continuation required by COBRA for any of its
employees who are not Transferred Employees.
(n) AMD agrees that it will pay any and all amounts due with respect
to any accrued vacation balance as of the Closing Date and accrued personal paid
absences as of the Closing Date to (i) any Transferred Employee on the Closing
Date and (ii) any Inactive Employee, Visa Employee or International Employee on
the date that such Inactive Employee, Visa Employee or International Employee
becomes a Transferred Employee.
8.5 Additional Audited Financial Statements.
---------------------------------------
AMD shall use its Reasonable Efforts to deliver to LLC an audited
balance sheet of the Business as of December 27, 1998 and audited income
statements and statement of cash flows of the Business for the years ended
December 28, 1997 and December 27, 1998, each prepared in accordance with GAAP,
by September 30, 2000.
8.6 Noncompetition.
--------------
(a) AMD agrees that, for the period from the Closing to the date
which is the second anniversary of the Closing Date, neither AMD nor any of
AMD's controlled Affiliates will, directly or indirectly, for its own benefit or
as agent of another, carry on or own, manage or operate, participate in, or
control the management or operation of, or allow its name to be used in, the
Communications Products Business (i) in the State of California, (ii) in the
State of Texas and (iii) in the United States of America. For purposes of this
Section 8.6, the "Communications Products Business" shall mean the design,
manufacture and sale of (1) communications infrastructure equipment including,
but not limited to, Subscriber Line Interface Circuits (SLIC), Subscriber Line
Audio processing Circuits (SLAC), and integrated circuits designed for and
dedicated to the communication of voice or voice and data over public and
private communications networks, (2) integrated circuits designed for and
dedicated to communication of voice or voice and data over cordless telephones,
(3) integrated circuits designed for and dedicated to communication of voice or
voice and data over wireless telephones (specifically excluding data only
internet access devices); and (4) integrated circuits designed for Digital
Subscriber Line (DSL) equipment intended for ATU-C applications.
(b) Nothing contained herein shall (i) limit AMD (A) from acquiring
(including through a merger) or investing in any business, development
arrangement or joint venture whose primary activities do not constitute a
Communications Products Business, or (B) from, directly or indirectly, holding
or making investments in securities of any business listed on a national
securities exchange, admitted to trading in an automated quotations market
traded generally on the over-the-counter market, so long as AMD's direct or
indirect holdings do not exceed 5% of the outstanding equity securities thereof,
or (ii) apply to the activities of any Person merging with or into AMD, or
acquiring, directly or indirectly, the equity securities of, or control of, AMD,
provided that such activities have been conducted prior to such merger or
acquisition by such Person.
32
(c) AMD recognizes and agrees that compliance with the covenant
contained in this Section 8.6 is necessary to protect LLC and the Company and
that a breach by AMD of any of the covenants set forth in this Section 8.6 could
cause irreparable harm to LLC, that LLC's remedies at law in the event of such
breach would be inadequate, and that, accordingly, in the event of such breach,
a restraining order or injunction or both may be issued against AMD, in addition
to any other rights and remedies which are available to LLC. If this Section 8.6
is more restrictive than permitted by the law of any jurisdiction in which LLC
seeks enforcement hereof, this Section 8.6 shall be limited to the extent
required to permit enforcement under such laws. In particular, the parties
intend that the covenants in the preceding portions of this Section 8.6 shall be
construed as a series of separate covenants, one for each location specified.
Except for geographic coverage, each such separate covenant shall be deemed
identical in terms. If, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants deemed included in this Section 8.6, then
such unenforceable covenant shall be deemed eliminated from these provisions for
the purpose of those proceedings to the extent necessary to permit the remaining
separate covenants to be enforced. If any court of competent jurisdiction shall
determine the foregoing covenant to be unenforceable with respect to the term or
the scope of the subject matter or geography covered thereby, then such covenant
shall nevertheless be enforceable by such court against the other party upon
such shorter term or within such lesser scope as may be determined by such court
to be reasonable and enforceable.
8.7 Distributor Price Adjustments. The Company will, within 15 days
-----------------------------
after the end of the month in which the Closing occurs, provide AMD with a
statement of distributor price adjustments for the period on and before the
Closing Date. AMD will promptly pay the Company the amount of the distributor
price adjustments for the period on and before the Closing Date.
8.8 Required Consents. To the extent that any Required Consent is not
-----------------
obtained on or before the Closing Date, AMD will use its Reasonable Efforts for
a reasonable period of time following the Closing to obtain such Required
Consent as soon as practicable after the Closing Date.
ARTICLE IX.
TAX MATTERS
9.1 Tax Returns Through the Closing Date; Cooperation.
-------------------------------------------------
(a) AMD shall include the income of the Company on AMD's consolidated
federal income Tax Returns for all periods through the Closing Date and timely
pay any federal income Taxes attributable to such income. All such Tax Returns
(i) will be filed when due in accordance with all applicable laws and (ii) will
be true and complete in all material respects. The Company shall furnish Tax
information to AMD for inclusion in AMD's federal consolidated income Tax Return
for the period that includes the Closing Date in accordance with AMD's past
custom and practice. The income of the Company shall be apportioned to the
period up to and including the Closing Date and the period after the Closing
Date by closing the books of the Company as of the end of the Closing Date.
33
(b) AMD shall prepare and file with the appropriate authorities all
Tax Returns of the Company not covered by Section 9.1(a) hereof for all taxable
periods of the Company ending on or prior to the Closing Date ("Pre-Closing
-----------
Periods"), and shall timely pay all Taxes due with respect to such Tax Returns.
-------
All such Tax Returns (i) will be filed when due in accordance with all
applicable laws and (ii) will be true and complete in all material respects.
(c) LLC shall cause the Company to prepare and file with the
appropriate authorities all Tax Returns of the Company for all taxable periods
beginning after the Closing Date ("Post-Closing Periods") and all complete
--------------------
taxable periods that include, but do not end on, the Closing Date ("Straddle
--------
Periods"), and shall timely pay all Taxes due with respect to such Tax Returns;
-------
provided, however, that (i) LLC shall not permit the Company to file a Tax
Return in respect of a Straddle Period without AMD's prior written consent,
which shall not be unreasonably withheld, and (ii) AMD shall reimburse the
Company for any Taxes owed by the Company with respect to the portion of any
Straddle Period related to the Pre-Closing Period. For purposes of allocating
Taxes to the portion of any Straddle Period related to the Pre-Closing Period,
to the extent permitted by law and administrative practice, the Straddle Period
shall be treated as closing on (and including) the Closing Date. In the case of
any Taxes that are payable for a Straddle Period that is not treated under the
preceding sentence as closing on the Closing Date, the portion of such Tax
related to the Pre-Closing Period shall be deemed to be: (i) in the case of
real, personal and intangible property Taxes ("Property Taxes") of the Company
--------------
for the Pre-Closing Period, the amount of such Tax for the Straddle Period shall
be equal to the amount of such Property Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days during
the Straddle Period that are in the Pre-Closing Period and the denominator of
which is the number of days in the Straddle Period, and (ii) the Taxes of the
Company other than Property Taxes for the Pre-Closing Period shall be computed
as if such taxable period ended as of the close of business on the Closing Date.
(d) AMD, the Company, and LLC shall reasonably cooperate and shall
cause their respective Affiliates, officers, employees, agents, auditors and
representatives reasonably to cooperate, in preparing and filing all Tax Returns
relating to Taxes, including maintaining and making available to each other all
records necessary in connection with Taxes and in resolving all disputes and
audits with respect to all taxable periods relating to Taxes. In that
connection, as soon as practicable, but in any event within 45 days after it is
requested by LLC or AMD after the Closing Date, the other party will deliver to
the requesting party such information and data concerning the pre-Closing
operations of the Company and make available such knowledgeable employees of the
Company as such requesting party may reasonably request, including providing
information and data required by the requesting party's customary tax and
accounting questionnaires, in order to enable the requesting party to complete
and file all forms and reports which it may be required to file as to the
operations of the Company through the Closing Date or to otherwise enable the
requesting party to satisfy its internal accounting, tax and other legitimate
requirements. In addition to the foregoing, AMD and LLC agree, and LLC agrees to
cause the Company (i) to use the respective party's Reasonable Efforts to
properly retain and maintain all records related to Taxes of the Company for all
Pre-Closing Periods until such time as the other party agrees (which agreement
shall not be unreasonably withheld) that such retention and maintenance is no
longer necessary (but in no event shall such retention be required for more
34
than five years), and (ii) to allow LLC and AMD, as the case may be, and their
respective agents and representatives (and agents and representatives of their
affiliates), at times and dates mutually acceptable to the parties, to inspect,
review and make copies of such records as the requesting party may deem
necessary and appropriate from time to time, such activities to be conducted
during normal business hours and at the requesting party's expense.
9.2 Tax Indemnification.
-------------------
(a) AMD hereby indemnifies each LLC Indemnified Party against and
agrees to hold each LLC Indemnified Party harmless from any (w) Tax of the
Company described in clause (i) of the definition of Tax related to a Pre-
Closing Period or the pre-Closing portion of any Straddle Period, (x) Tax
described in clause (ii) or (iii) of the definition of Tax, (y) Tax of the
Company resulting from a breach of the provisions of Section 3.13 or Article IX,
and (z) liabilities, costs, expenses (including, without limitation, reasonable
expenses of investigation and attorneys' fees and expenses), losses, damages,
assessments, settlements or judgments arising out of or incident to the
imposition, assessment or assertion of any Tax described in (w), (x) or (y), and
any liability as transferee (the sum of (w), (x), (y), and (z) being referred to
herein as a "Tax Loss").
(b) With respect to any claim that is made by any taxing authority
which, if successful, might result in an indemnity payment to LLC or any of its
affiliates indemnified hereunder (a "Tax Claim") (other than a Tax Claim
---------
relating to Taxes of the Company for a Straddle Period), AMD shall, at its sole
expense control all proceedings, including but not limited to audits, taken in
connection with such Tax Claim (including selection of counsel) and, without
limiting the foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto, and may, in its sole discretion, either pay the
Tax claimed and sue for a refund where applicable law permits such refund suits
or contest the Tax Claim in any permissible manner; provided, however, that AMD
shall not take any position or enter into any settlement with respect to any
such proceeding which materially adversely affects the tax liability of LLC, any
of its Affiliates, or, on or after the Closing Date, the Company (including but
not limited to the basis of the Company in the CPD Assets and the allocation of
such basis), without the prior written consent of LLC. With respect to any such
Tax Claims as to which AMD asserts control, AMD shall not assert that such Tax
Claim (or portion thereof) is not within the ambit of Section 9.2(a). AMD and
LLC shall jointly control all proceedings taken in connection with any Tax Claim
relating to Taxes of the Company for a Straddle Period. In no case shall LLC,
the Company, or any of their respective officers, directors, employees,
stockholders, agents or representatives settle or otherwise compromise any Tax
Claim without AMD's written consent, which shall not be unreasonably withheld.
Neither party shall settle a Tax Claim relating to Taxes of the Company for any
Straddle Period without the other party's prior written consent, which shall not
be unreasonably withheld. LLC, the Company, and each of their respective
Affiliates shall cooperate with AMD in contesting any Tax Claim, which
cooperation shall include, without limitation, the retention and (upon AMD's
reasonable request) the provision to AMD of records and information which are
reasonably relevant to such Tax Claim, and making employees available on a
mutually convenient basis to provide additional information or
35
explanation or any material provided hereunder or to testify at proceedings
relating to such Tax Claim.
(c) Upon payment by any LLC Indemnified Party of any Tax Loss, AMD
shall discharge its obligation to indemnify LLC Indemnified Party against such
Tax Loss by payment to LLC an amount equal to the amount of such Tax Loss;
provided, however, that if LLC provides AMD with written notice of a Tax Loss at
least 60 days prior to the date on which the relevant Tax Loss is required to be
paid by any LLC Indemnified Party, AMD shall discharge its obligation to
indemnify LLC against Tax Loss by paying, as directed by LLC, an amount equal to
the amount of such Tax Loss. Any payment pursuant to this Section 9.2 shall be
made not later than 60 days after receipt by AMD of written notice from LLC in
accordance with the foregoing proviso or stating that any Tax Loss has been
incurred by a LLC Indemnified Party and the amount thereof and of the indemnitee
payment requested. The payment by a LLC Indemnified Party of any Tax Loss shall
not relieve AMD of its obligation under this Section 9.2.
(d) Any claim of any LLC Indemnified Party (other than LLC) under
this Section may be made and enforced by LLC on behalf of such LLC Indemnified
Party.
9.3 Refunds. AMD shall be entitled to any refunds or credits
-------
(including any interest paid or credited with respect thereto) in respect of any
liability for any Tax of AMD or any of its Affiliates (including, without
limitation, the Company), for any Tax periods or portion thereof ending on or
before the Closing Date (including any Taxes allocated to such period under
Section 9.1(c) hereof) or for which AMD is otherwise liable under this
Agreement. The Company shall be entitled to any refunds or credits (including
any interest paid or credited with respect thereto) in respect of any liability
for any Tax of the Company or any of its Affiliates, for any Tax periods or
portion thereof beginning after the Closing Date (including any Taxes allocated
to such period under Section 9.1(c) hereof) and for which AMD does not have an
indemnification obligation under this Agreement. Each party shall cause any
amount to which the other party is entitled under this Section 9.3, but which is
received or credited to the party not so entitled or any of such party's
Affiliates, at any time after the Closing Date, to be paid to the party so
entitled in immediately available funds promptly after receipt (or, if the
amount of the credit or refund is applied against any other liability of the
party not so entitled, within ten days of the notice of such application).
9.4 Conduct of Business on Closing Date. On the Closing Date, LLC
-----------------------------------
shall cause the Company to conduct its business in the ordinary course in
substantially the same manner as presently conducted and shall not permit the
Company to effect any extraordinary transactions (other than any such
transactions expressly required by applicable law or by this Agreement) (or any
Ancillary Agreement) that could result in Tax liability for the Company in
excess of the Tax liability associated with the conduct of its business in the
ordinary course.
9.5 Tax Sharing Agreements. AMD shall cause the provisions of any Tax
----------------------
sharing agreement between AMD and any of its Affiliates (other than the
Company), on the one hand, and the Company, on the other hand, to be terminated
on or before the Closing Date.
36
9.6 Changes to Elections, Etc. Without the prior written consent of
-------------------------
LLC, none of AMD, the Company and any Affiliate of AMD shall, to the extent it
may affect or relate to the Company, make or change any Tax election, change any
annual Tax accounting period, adopt or change any method of Tax accounting, file
any amended Tax Return, enter into any closing agreement, settle any Tax claim
or assessment, surrender any right to claim a Tax refund, consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment or take or omit to take any other action, if any such action or
omission would have the effect of materially increasing the Tax liability of the
Company, LLC or any Affiliate of LLC in respect of any Post-Closing Period.
Without AMD's prior written consent, LLC shall not cause or permit the Company
and any other Affiliate of LLC to make or change any Tax election, change any
annual Tax accounting period, adopt or change any method of Tax accounting, file
any amended Tax Return, enter into any closing agreement, settle any Tax Claim
or assessment, surrender any right to claim a Tax refund, consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment or take or omit to take any other action, if such action or omission
would have the effect of materially increasing the Tax liability or materially
reducing any Tax asset of AMD or any of its Affiliates in respect of any Pre-
Closing Period.
9.7 Characterization as Price Adjustment. All amounts paid pursuant
------------------------------------
to this Agreement by one party to another party (other than interest payments)
shall be treated by such parties as an adjustment to the Stock Purchase Price.
9.8 Allocation of Sales Price. Within sixty days after the Closing
-------------------------
Date, LLC shall provide AMD with its proposed allocation of the sale price to
the CPD Assets. LLC and AMD agree to cooperate in good faith to reach an agreed
allocation of federal income tax basis to the CPD Assets. LLC and AMD shall file
all Tax Returns in a manner which is consistent with the federal income tax
treatment of the transaction set forth herein or determined pursuant to this
provision.
9.9 Texas Transfer Tax Matters. LLC and AMD intend to treat the
--------------------------
transactions contemplated by this Agreement and the Ancillary Agreements as an
"occasional sale" within the meaning of section 151.304 of the Texas Limited
Sales, Excise and Use Tax Act, and AMD will treat such transactions consistently
therewith on the return required to be filed it for Texas Limited Sales, Excise
and Use Tax purposes for the taxable period to which such transactions relate.
9.10 Tax Treatment. LLC and AMD agree that the transactions
------------
contemplated by this Agreement and the Reorganization Agreement are intended to
constitute a taxable sale of the CPD Assets by AMD and agree to treat such
transactions consistently therewith for all income tax purposes, unless
otherwise required by an applicable taxing authority (which requirement is not
initiated by AMD).
37
ARTICLE X.
INDEMNIFICATION; SURVIVAL OF
REPRESENTATIONS, ETC.
10.1 Survival of Representations, Etc. The covenants, representations
--------------------------------
and warranties contained herein shall survive the Closing Date until, and claims
based upon or arising out of such representations and warranties, as well as any
claims based upon or arising out of any covenants and agreements herein or made
hereunder, may be asserted at any time before, 5:00 p.m. Pacific Time on the
first anniversary of the Closing Date, at which time, such covenants,
agreements, representations and warranties shall expire and terminate, provided,
however, that (i) the representations and warranties of AMD respecting Taxes set
forth in Section 3.13 shall survive the Closing for the applicable statute of
limitations, at which time such representations and warranties shall expire and
terminate; (ii) the obligation of AMD to indemnify LLC for any loss arising out
of any Retained Liabilities pursuant to Section 10.2(a)(i), shall survive the
Closing without limitation as to time; (iii) the obligation of LLC to indemnify
AMD for any loss arising out of the Assumed Liabilities or for the ownership and
operation of the Business or the Company from and after the Closing, in each
case pursuant to Section 10.2(a)(ii), shall survive the Closing without
limitation as to time; (iv) the obligation of AMD to indemnify LLC for any loss
arising out of Intellectual Property Liabilities pursuant to Section
10.2(a)(i)(C) shall survive the Closing without limitation as to time; and (v)
the covenants and agreements of AMD or LLC under this Agreement to be performed
after Closing Date shall survive the Closing, to the extent specifically
provided herein (as applicable, the "Survival Period"). The termination of the
---------------
representations, warranties, covenants and agreements provided herein shall not
affect the rights of a party in respect of any claim made by such party in a
writing received by the other party prior to the expiration of the Survival
Period, nor shall it affect the rights of a party in respect of any claim made
by such party at any time hereafter in respect of any Assumed Liabilities or
Retained Liabilities. Notwithstanding anything to the contrary in this
Agreement, indemnification for breaches of representations, warranties,
covenants and agreements related to Taxes shall be covered exclusively by
Article IX of this Agreement.
10.2 Indemnification.
---------------
(a) General.
-------
(i) Subject to Section 10.1, subsequent to the Closing
Date, AMD shall indemnify LLC, its Affiliates, and each of their respective
partners, officers, directors, employees, stockholders and agents (the
"LLC---Indemnified Parties") against, and hold each of LLC Indemnified
-------------------------
Parties harmless from, any Losses incurred by any such LLC Indemnified
Party, that are incident to, arise out of, are in connection with, or are
related to, whether directly or indirectly, (A) the breach of any warranty,
representation, covenant or agreement of AMD contained in this Agreement,
(B) the Retained Liabilities (other than those described in clause (m) of
the definition of Retained Liabilities) or (C) Intellectual Property
Liabilities.
38
(ii) Subject to Section 10.1, subsequent to the Closing Date,
LLC shall indemnify AMD, its Affiliates, and each of their respective
partners, officers, directors, employees, stockholders and agents (the "AMD
---
Indemnified Parties") against, and hold each of AMD Indemnified Parties
-------------------
harmless from, any Losses incurred by such AMD Indemnified Party, that are
incident to, arise out of, are in connection with, or are related to,
whether directly or indirectly, (A) the breach of any warranty,
representation, covenant or agreement of LLC contained in this Agreement,
(B) the Assumed Liabilities (except for those Liabilities with respect to
which any LLC Indemnified Party is entitled to indemnification from AMD
pursuant to Section 10.2(a)(i)(A)) or (C) the ownership and operation of
the Business or the Company from and after the Closing.
(b) Procedure For Claims. If a claim for Losses (a "Claim") is to be
-------------------- -----
made by a Person entitled to indemnification hereunder, the Person claiming such
indemnification (the "Indemnified Party") shall give written notice (a "Claim
----------------- -----
Notice") to the indemnifying Person (the "Indemnifying Party") as soon as
------ ------------------
practicable after the Indemnified Party becomes aware of any fact, condition or
event which may give rise to Losses for which indemnification may be sought
under this Section 10.2. The failure of any Indemnified Party to give timely
notice hereunder shall not affect rights to indemnification hereunder, except to
the extent that the Indemnifying Party demonstrates actual damage caused by such
failure. In the case of a Claim involving the assertion of a claim by a third
party (whether pursuant to a lawsuit or other legal action or otherwise, a
"Third-Party Claim"), (A) the Indemnifying Party shall be entitled, if it so
------------------
elects, at its own cost, risk and expense, (1) to take control of the defense
and investigation of such Third-Party Claim and (2) to pursue the defense
thereof by appropriate actions or proceedings, including, without limitation, to
employ and engage attorneys of its own choice reasonably acceptable to the
Indemnified Party to handle and defend the same, and (B) the Indemnifying Party
shall be entitled (but not obligated), if it so elects, to compromise or settle
such claim, which compromise or settlement shall be made only with the written
consent of the Indemnified Party, such consent not to be unreasonably withheld.
In the event the Indemnifying Party elects to assume control of the defense and
investigation of such lawsuit or other legal action in accordance with this
Section 10.2(b), the Indemnified Party may, at its own cost and expense,
participate in the investigation, trial and defense of such Third-Party Claim.
If the Indemnifying Party fails to assume the defense of such Third-Party Claim
in accordance with this Section 10.2 within 30 calendar days after receipt of
the Claim Notice, the Indemnified Party against which such Third-Party Claim has
been asserted shall (upon delivering notice to such effect to the Indemnifying
Party) have the right to undertake, at the Indemnifying Party's cost, risk and
expense, the defense, compromise and settlement of such Third-Party Claim on
behalf of and for the account of the Indemnifying Party; provided that such
Third-Party Claim shall not be compromised or settled without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. In the event the Indemnifying Party assumes the defense of the claim,
the Indemnifying Party shall keep the Indemnified Party reasonably informed of
the progress of any such defense, compromise or settlement, and in the event the
Indemnified Party assumes the defense of the claim, the Indemnified Party shall
keep the Indemnifying Party reasonably informed of the progress of any such
defense, compromise or settlement. The Indemnifying Party shall be liable for
any settlement of any Third-Party Claim effected pursuant to and in accordance
with this Section 10.2 and for any final judgment (subject to any right of
39
appeal), and the Indemnifying Party agrees to indemnify and hold harmless each
Indemnified Party from and against any and all Losses by reason of such
settlement or judgment.
10.3 Threshold; Limitations on Liability.
-----------------------------------
(a) Except as provided in Sections 10.3(c) and 10.3(d), LLC
Indemnified Parties shall not be entitled to recover for any Losses pursuant to
this Article X until such time as the Losses claimed by LLC Indemnified Parties
in the aggregate exceed $6,000,000, and then only to the extent of such excess.
(b) Except as provided in Section 10.3(c), the maximum aggregate
amount of Losses for which AMD Indemnifying Parties shall be liable pursuant to
this Article X shall be $60,000,000.
(c) The thresholds and limitations set forth in this Section 10.3
shall not apply with respect to any Claim by an Indemnified Party with respect
to: (i) the Retained Liabilities (in the case of a Claim by a LLC Indemnified
Party); or (ii) the breach of any covenant or agreement to be performed after
the Closing.
(d) With respect to the obligation of AMD Indemnifying Parties to
indemnify LLC Indemnified Parties for any Intellectual Property Liabilities
pursuant to Section 10.2(a)(i)(C), the maximum amount of Losses for which AMD
Indemnifying Parties shall be liable pursuant to this Article X shall be
$10,000,000. The threshold set forth in Section 10.3(a) shall not apply in the
case of a Claim by an LLC Indemnified Party with respect to any Intellectual
Property Liabilities.
10.4 Insurance Proceeds. To the extent that any Claim is covered by
------------------
insurance held by the Indemnified Party, such Indemnified Party shall be
entitled to indemnification pursuant to this Article X only with respect to the
amount of Losses that are in excess of the cash proceeds received by such
Indemnified Party pursuant to such insurance. If such Indemnified Party receives
such cash insurance proceeds prior to the time such Claim is paid, then the
amount payable by the Indemnifying Party pursuant to such Claim shall be reduced
by the amount of such insurance proceeds. If such Indemnified Party receives
such cash insurance proceeds after such Claim is paid, then upon receipt by the
Indemnified Party of any cash proceeds pursuant to such insurance with respect
to such Claim, such Indemnified Party shall repay any portion of such amount
which was previously paid by the Indemnifying Party to the Indemnified Party in
satisfaction of such Claim.
10.5 Indemnification as Exclusive Remedy. Subsequent to the Closing,
-----------------------------------
with respect to any matter as to which indemnification is provided pursuant to
Article IX or X of this Agreement, such indemnification shall be the sole remedy
available to the indemnified party. Notwithstanding the foregoing, the parties
hereto may exercise their rights under this Agreement and applicable law to
equitable remedies, including, without limitation, specific performance and
injunction.
40
ARTICLE XI.
MISCELLANEOUS
11.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby abandoned (a) by mutual agreement of AMD and
LLC or (b) by either AMD or LLC if the conditions to such parties' obligations
set forth in Articles VI and VII, as the case may be, have not been satisfied
(unless waived by the party entitled to the benefit thereof), and the Closing
has not occurred on or before September 30, 2000 without liability of either
party hereto; provided, however, that no party shall be released from liability
hereunder if this Agreement is terminated and the transactions abandoned by
reason of the failure of such party to have performed its obligations hereunder.
In the event that a condition precedent to a party's obligations is not
satisfied, nothing contained herein shall be deemed to require any party to
terminate this Agreement, rather than to waive such condition precedent and
proceed with the transactions contemplated hereby. Except as provided above, if
this Agreement is terminated and the transactions contemplated hereby are not
concluded as described above, this Agreement will become void and of no further
force and effect; provided, however, that the Confidentiality Agreement shall
survive any termination of this Agreement.
11.2 Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of the heirs, personal representatives, successors and assigns of
the parties. No party hereto may assign or transfer any of its rights or
obligations under this Agreement, except with the prior written consent of the
other parties hereto, except that the Company shall be entitled to assign its
rights hereunder to or for the account of the Senior Secured Lender solely and
specifically for the purpose of securing the Financing, which assignment shall
not affect the Company's obligations under this Agreement.
11.3 No Third Party Beneficiaries; No Recourse. This Agreement is for
-----------------------------------------
the sole benefit of the parties and nothing herein expressed or implied shall
give or be construed to give any person or entity other than the parties any
legal or equitable rights hereunder. The directors, officers and stockholders of
the parties hereto and their Affiliates shall not any personal liability or
obligation arising under this Agreement or the Ancillary Agreements or any
transaction contemplated hereby or thereby solely by reason of their capacity as
such.
11.4 Costs and Expenses. Except as otherwise specifically provided
------------------
herein, all costs and expenses incurred by or on behalf of AMD, the Company and
LLC, including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants employed in connection with the
authorization, preparation, execution, and performance of this Agreement or
other matters relating thereto shall be borne solely by the party that incurred
the same and the other party shall have no liability with respect thereof. AMD
and the Company shall each pay half of (i) all fees to effect the transfer of
the CPD Intellectual Property from AMD to the Company, (ii) all fees of Ernst & Young incurred in connection with Ernst & Young's audit of the financial
statements of the Business for the years ended December 28, 1997, December 27,
1998 and December 26, 1999 and (iii) all fees incurred in connection with the
solvency opinion referred to in Section 5.9 of this Agreement. The Company's
obligations for such payments shall be obligations of the Company following the
Closing.
41
All excise, sales, use, value added, registration stamp, recording,
documentary, conveyancing, franchise, property, transfer, gains and similar
Taxes, levies, charges and fees (collectively, "Transfer Taxes") incurred in
--------------
connection with the transactions contemplated by this Agreement and the
Reorganization Agreement shall be shared equally by AMD and the Company. LLC,
the Company and AMD shall cooperate in providing each other with any appropriate
resale exemption certifications and other similar documentation. The party that
is required by applicable law to make the filings, reports, or returns with
respect to any applicable Transfer Taxes shall do so, and the other parties
shall cooperate with respect thereto as necessary.
11.5 Notices. Unless otherwise provided herein, any notice, request,
-------
instruction or other document to be given hereunder by any party to the others
shall be in writing and effective when delivered in person or by courier or
nationally recognized overnight delivery service (with a receipt obtained
therefor), or by facsimile transmission (with an executed copy mailed as
described below), or effective on the date receipt is acknowledged when mailed
by certified mail, postage prepaid, return receipt requested, as follows:
If to AMD (or the Advanced Micro Devices, Inc.
Company prior to the One AMD Place
Closing): P.O. Box 3453
Sunnyvale, California 94088-3453
Facsimile: (408) 774-7399
Attention: General Counsel
With a copy to: Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
Facsimile: (650) 463-2600
Attention: Christopher L. Kaufman
If to LLC (or the BraveTwo Acquisition, L.L.C.
Company after c/o Francisco Partners, L.P.,
the Closing): One Maritime Plaza, Suite 2500
San Francisco, California 94111
Attention: General Counsel
Facsimile: (415) 986-1320
With a copy to: Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, California 94025
Attention: William M. Kelly
Facsimile: (650) 752-2111
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
42
11.6 Choice of Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with the internal laws of
the State of California, applicable to contracts to be wholly-performed within
California by California residents, without regard to the conflict of law
principles thereof.
11.7 Entire Agreement; Amendments and Waivers. This Agreement,
----------------------------------------
together with the Disclosure Schedule and all exhibits hereto, the Ancillary
Agreements and the Confidentiality Agreement, constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by all parties. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.8 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
11.10 Headings; Interpretation. The headings of the Articles and
------------------------
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
11.11 Publicity. The initial press releases with respect to the
---------
execution of this Agreement shall be reasonably acceptable to LLC and AMD.
Thereafter, so long as this Agreement is in effect, neither LLC, AMD nor any of
their respective Affiliates shall issue or cause the publication of any press
release or other announcement with respect to this Agreement or the other
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange.
43
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
or have caused this Agreement to be duly executed on their respective behalf by
their respective officers thereunto duly authorized, as of the day and year
first above written.
ADVANCED MICRO DEVICES, INC.
By: /s/ Thomas M. McCoy
--------------------------------------
Name: Thomas M. McCoy
Title: Senior Vice President
BRAVETWO ACQUISITION, L.L.C.
By: /s/ Benjamin H. Ball
--------------------------------------
Name: Benjamin H. Ball
Title: Manager
BOLDCO, INC.
By: /s/ Thomas M. McCoy
--------------------------------------
Name: Thomas M. McCoy
Title: President
44

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